Question

A monopoly has an inverse demand curve given by: p=28-Q And a constant marginal cost of...

A monopoly has an inverse demand curve given by: p=28-Q

And a constant marginal cost of $4. Calculate deadweight loss if the monopoly charges the profit-maximizing price.
Round the number to two decimal places.

Homework Answers

Answer #1

Q

P

TR

TC

Profit

MC

MR

0

28

0

0

0

4

28

2

26

52

8

44

4

24

4

24

96

16

80

4

20

6

22

132

24

108

4

16

8

20

160

32

128

4

12

10

18

180

40

140

4

8

12

16

192

48

144

4

4

14

14

196

56

140

4

0

16

12

192

64

128

4

-4

18

10

180

72

108

4

-8

20

8

160

80

80

4

-12

22

6

132

88

44

4

-16

24

4

96

96

0

4

-20

26

2

52

104

-52

4

-24

28

0

0

112

-112

4

-28

DWL = area of the triangle = 0.5*(24-12)*(16-4) = $72.00

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